by Alan Thornhill
The Federal government will haul Australia’s banks before a powerful parliamentary committee as it seeks to persuade them to pass on the Reserve Bank’s latest interest rate cut in full.
The Prime Minister, Malcolm Turnbull and his Treasurer, Scott Morrison, made the announcement in a joint statement today.
Labor might well have gone further.
It promised a royal commission into the behavior of Australia’s banks, before last month’s Federal elections.
Mr Turnbull said that in challenging economic times globally, it is important that Australians retain faith in our financial institutions and the decisions they are taking.
“The Australian economy depends critically on the performance and strength of our banking and financial system,” Mr Turnbull said.
” Banks operate under a social licence and have responsibilities to the Australian public.”
He said they would be asked, particularly about several matters.when they appear before the House of Representatives Economics Committee.
In particular the banks would be required to explain:
- International economic and financial market developments and how these are affecting Australia
- Developments in prudential regulation, including capital requirements, and how these are affecting the policies of Australian banks
- The costs of funds, impacts on margins and the basis for bank interest rate pricing decisions
- How individual banks and the banking industry as a whole are responding to issues previously raised in Parliamentary inquiries through their package of reforms announced in April 2016
- Bank perspectives on the performance of the Australian economy, including strengths and risks.
The appearance by the banks will ensure they have the important opportunity to transparently account for their decision making and how they balance the needs of borrowers, savers, shareholders and the wider community, Mr Turnbull said.
The initial response from Australia’s banks was cautious.
Andrew Thorburn, the National Australia Bank’s Chief Executive Officer, said for example that his bank is looking forward to the dialogue around “how we balance” the needs of different stakeholders.
He said it is also anticipating “outlining the full cost of being an unquestionably strong bank and bringing further insight to the topic of how we set our interest rates.
“I am proud to be a banker,” he added.
” It has always required carefully thought through decisions,” he added.
“But the focus has been on serving the many people who rely on us to get these decisions right. ”
Weathercoast by Alan Thornhill
A novel on the murder of seven young Anglican Christian Brothers in the Solomon Islands.
Available now on the iTunes store.
Alan Thornhill is a parliamentary press gallery journalist.
Private Briefing is updated daily with Australian personal finance news, analysis, and commentary.
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